Institutional Investor Profiles Pomona Student's Hedge Fund

In the July/August 2009 issue of Institutional Investor there's a profile of Merritt Graves PO '11, a Pomona student who has more than $4 million under management in his hedge fund, based in downtown Claremont.

I know very, very little about finance -- my plan is to learn more in my final years at Claremont McKenna -- but I do know enough to think that these numbers are well, very impressive.

...the numbers put up by Caelum Capital, as Graves’s five-person firm is known, are impressive. For a fund piloted by a kid who has no professional investment training and who only recently moved out of the dorms, they are uncanny. Last year, when the average equity hedge fund manager was down 26.4 percent, according to Chicago-based Hedge Fund Research, Graves was up 40.6 percent. In 2007 he returned 174.1 percent, after more than tripling his money the previous year — and nearly doubling it the year before that. . . .

. . . After taking a year off from trading to study the markets, the then-teen summoned the courage to borrow another $7,000 from the same individual [whose money he initially lost], who agreed to give him a shot at making up the prior loss in exchange for half of any additional trading profits.

It proved to be a smart bet. Within a year Graves had turned the $7,000 into $340,000, netting a personal profit of $100,000 after taxes. His winning streak continued as he began studies at the University of Iowa, spent a year abroad at Australian National University and took 12 months off to live in Berkeley, California, to focus on his trading before continuing his education at Pomona. During that three-and-a-half-year period, he turned the $100,000 into $2.8 million, which he used to seed Caelum Capital in October 2007.

I imagine that there are a lot of CMC finance guys who wish that this was their life story, instead of some Pomona student. Still, hats off to Mr. Graves, whose middle class origins and tenacity is downright impressive.